Tax Credit Investments

6 Months Ended

Jun. 30, 2021

TCIs are primarily for investments promoting qualified affordable housing projects and investments in community development entities. Investments in these projects generate a return primarily through the realization of federal income tax credits and deductions for operating losses over a specified time period.

The TCIs are included in other assets, with any unfunded equity commitments recorded in other liabilities on the consolidated balance sheets. Certain TCIs qualify for the proportional amortization method and are amortized over the period the Corporation expects to receive the tax credits, with the expense included within income taxes on the consolidated statements of income. Other TCIs are accounted for under the equity method of accounting, with amortization included within non-interest expense on the consolidated statements of income. This amortization includes equity in partnership losses and the systematic write-down of investments over the period in which income tax credits are earned. All of the TCIs are evaluated for impairment at the end of each reporting period.

The following table presents the balances of the Corporation's TCIs and related unfunded commitments:


		June 30,		December 31,
		2021		2020
Included in other assets:		(in thousands)
Affordable housing tax credit investment, net		$	162,431	$	152,203
Other tax credit investments, net		50,577		59,224
	Total TCIs, net	$	213,008	$	211,427
Included in other liabilities:
Unfunded affordable housing tax credit commitments		$	47,354	$	31,562
Other tax credit liabilities		41,217		49,491
	Total unfunded tax credit commitments and liabilities	$	88,571	$	81,053

The following table presents other information relating to the Corporation's TCIs:


		Three months ended June 30				Six months ended June 30
		2021		2020		2021		2020
Components of income taxes:		(in thousands)
Affordable housing tax credits and other tax benefits		$	(6,543)	$	(7,194)	$	(13,031)	$	(14,388)
Other tax credit investment credits and tax benefits		(722)		(941)		(1,445)		(1,882)
Amortization of affordable housing investments, net of tax benefit		4,323		5,023		8,689		10,047
Deferred tax expense		160		208		320		416
	Total net reduction in income tax expense	$	(2,782)	$	(2,904)	$	(5,467)	$	(5,807)
Amortization of TCIs:
Affordable housing tax credits investment		$	1,018	$	1,022	$	2,004	$	2,044
Other tax credit investment amortization		545		428		1,090		856
	Total amortization of TCIs	$	1,563	$	1,450	$	3,094	$	2,900

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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